MEMORANDUM ORDER This case involves the claims of plaintiff Mave Hotel Investors (“Mave”) against its property insurer Certain Underwriters at Lloyd’s London (“Lloyd’s”) for property damage Mave contends occurred at its hotel following the termination of its contract with Acacia Network Housing (“Acacia”) to house families with children. After briefing and argument on Lloyd’s motion for summary judgment, the Court entered a bottom-line order on February 17, 2023 denying in large part Lloyd’s motion, although granting it with respect to any claim by Mave for consequential or punitive damages. See 2/17/23 Order, Dkt. 118. This Memorandum Order sets forth the reasons for that decision. I. Background Mave owns a small hotel on 28th Street and Madison Avenue in Manhattan, New York with 74 guest rooms.1 For three years from October 2017 through October 2020, Mave was under contract with Acacia to provide temporary housing to homeless families and their children. That contract was ultimately terminated by October 2020. Mave claims that its rooms were badly damaged before the families housed under the Acacia contract left. It has separately sued Acacia in New York State court for this damage, alleging that it paid $1.4 million to make needed repairs. Mave also submitted a claim for these repairs to Lloyd’s, from which it had obtained a general property insurance policy effective from January 29, 2020 through January 28, 2021. Lloyd’s denied coverage on the ground that any damage was in fact caused by ordinary wear and tear — a category explicitly excluded from coverage under Mave’s policy. Mave subsequently sued Lloyd’s for its failure to provide coverage. The case was initially assigned to Judge Torres. U.S. Bank National Association (“U.S. Bank”), which contends it holds the mortgage to Mave’s physical property and that it is entitled under Mave’s property insurance policy to the proceeds of a claim for property damage, moved to intervene in this case, a motion which both Mave and Lloyd’s opposed. Magistrate Judge Cott, to whom the matter was initially referred, recommended granting the motion, finding that U.S. Bank had adequately asserted an interest in the litigation, although not resolving the merits of its rights to any proceeds. See 8/16/22 Report and Recommendation, Dkt. 68. That recommendation was accepted by Judge Torres. See 9/22/22 Order, Dkt. 78. U.S. Bank then filed a complaint, seeking a declaratory judgment that Lloyd’s is obliged to pay it under the policy and that that Lloyd’s breached its contract by not paying, and a declaratory judgment for lost “business income” at Mave’s hotel. U.S. Bank Compl.
